Genworth Life and Annuity

Genworth Financial Group is an international financial-services company headquartered in Richmond, VA. The company was spun off from General Electric Financial in 2004 in an initial public offering that raised about $2.8 billion. At that time, this was the14th largest IPO of all time. A secondary offering in 2005 raised an additional $2.6 billion. Among the products offered today by Genworth Financial are annuities, investment services, life insurance, long-term-care insurance, mortgage insurance, Medicare supplement insurance and payment protection insurance.

The companies that later organized under the rubric of General Electric Financial began in 1871 with the debut of the Life Insurance Company of Virginia. Today, Genworth Financial Group has become one of America’s leading financial-service companies. It has 6,000 employees working in 25 countries around the world, managing over $100 billion in assets. As of 2007, Genworth Financial was number 227 on the Fortune 500 list of U.S. companies. It was number 318 on the Forbes Global 2000 list and number 9 on Fortune’s list of America’s Most Admired Companies, Insurance: Life & Health division. Genworth Financial Group is one of the companies that make up the S&P 500 index of stocks.

Genworth Annuities

Genworth offers single-premium immediate annuities, fixed deferred annuities and variable deferred annuities. The Genworth Life Insurance Company issues each of these annuity types. Some single-premium immediate annuities are issued by the Genworth Life Insurance and Annuity Company. The Genworth Life Insurance Company of New York offers both single-premium immediate annuities and fixed deferred annuities.

Ratings of Companies Issuing Genworth Annuities

As of September 9, 2009, each of the three companies issuing Genworth annuities were assigned the following ratings by the four major rating agencies: A.M. Best: A (3rd-best); Standard & Poor’s: A (3rd-best); Moody’s: A2 (6th-best); Fitch: A- (6th-best).

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2009 Ratings News

In 2009, Genworth Financial joined the ranks of the dozens of insurance companies to suffer downgrades in financial-strength ratings issued by the major rating agencies. Within two days of each other, on February 17 and 19, 2009, respectively, Fitch and A.M. Best each downgraded Genworth Financial by one notch in their ratings hierarchy. Roughly two months later, on April, 13, 2009, Moody’s followed suit.

Each of these evaluations looked to both the past and the future. The agencies observed the investment losses suffered by Genworth on its mortgage portfolios, which included heavy exposure to sub-prime and alt-A loans. (Best referred vaguely to Genworth’s “significant exposure to the mortgage markets,” while Fitch’s identification of Genworth’s non-performing assets was more explicit.) Although noting the company’s compensatory moves to shore up its liquidity and capital structure, the agencies anticipated further losses and financial pressure on the company in 2009. (Best noted “significant unrealized loss positions… within [the company’s] fixed-income portfolio” while Fitch foresaw “projected investment losses” that would affect “statutory capitalization… liquidity [and] financial flexibility.”) (Standard & Poor’s had acted earlier by downgrading the company’s rating in October, 2008, at the height of the financial crisis.)

Each agency acknowledged Genworth’s virtues. Best cited the company’s favorable competitive positions in term life, long-term care and mortgage insurance and in fixed annuities. They applauded Genworth’s “prudent commercial mortgage-loan underwriting practices and limited delinquencies to date.” Nevertheless, the three agencies were unanimous in declaring the immediate outlook for the company to be negative.

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